Jan Reid
Cracow University of Economics, Department of Economics, Graduate Student
Research Interests:
The paper provides an analysis of important U.S. macroeconomic variables that effect aggregate employment. The paper seeks to answer the question "What are the determinants of changes in aggregate employment in the United States of... more
The paper provides an analysis of important U.S. macroeconomic variables that effect aggregate employment. The paper seeks to answer the question "What are the determinants of changes in aggregate employment in the United States of America (U.S.)?" This is an important research topic because significant increases in unemployment can have a profound effect on an entire society, not just on its unemployed workers. When employment declines, public health declines, crime increases, suicides increase, and public revenues decrease. This paper uses quarterly data from 1948-2021 to estimate the effect of important macroeconomic variables on aggregate employment. The macroeconomic variables include personal consumption expenditures, U.S. federal government expenditures, nominal GNP, international trade (imports plus exports), M3 money stock, the minimum wage level, non-residential fixed investment, non-manufacturing employment, and U.S. federal tax receipts.
Research Interests:
The Capital Asset Pricing Model (CAPM) is often used to determine an appropriate return on equity for regulated utilities. However, the CAPM will sometimes produce unrealistically high or low results during times of excess market... more
The Capital Asset Pricing Model (CAPM) is often used to determine an appropriate return on equity for regulated utilities. However, the CAPM will sometimes produce unrealistically high or low results during times of excess market volatility. I hypothesize that these results do not indicate a failure in the model itself. Instead, they are caused by the traditional implementation of the CAPM and the underlying definition of risk used by many financial theorists.My paper uses 1997-2001 data to provide an empirical comparison of betas generated in a manner consistent with the capital asset pricing model (CAPM betas) to betas generated using a method based on market losses (“Alternative Betas”). I use psychological literature and a mathematical example to suggest that when a loss-based notion of risk is used, only those observations in which the market declines constitute market risk; and that the CAPM is a systematically biased estimator of market risk because the variability of gains receive the same weight as the variability of losses.In the CAPM world, there are only two types of risk: market risk (measured by beta), and firm-specific risk; with the assumption that only market risk will be rewarded since firm specific risk can be diversified away. The CAPM assumes that the market is mean-variance efficient; predicts that the constant term will be 0; and predicts that a security's risk premium is proportional to both beta and the risk premium of the market portfolio (Bodie, 1996). Mathematically, the risk premium is equal to β[E(rM) − rf], where rM is the market return and rf is the risk-free rate.In the 30 years since the initial publication of the CAPM, there have been numerous criticisms of the model in the financial literature. Studies have suggested that the CAPM is not testable because the composition of the true market portfolio is unknown (Roll, 1977); the constant term is positive and significant (Miller and Scholes, 1972); the estimated risk premium is significantly lower than the actual risk premium (Black, Jensen, and Scholes, 1972); non-systematic risk has a significant effect on excess returns (Lintner, 1965b); and the expected return-beta relationship is not fully consistent with empirical observations (Fama and MacBeth, 1973).
Research Interests:
The United States Congress approved the American Recovery and Reinvestment Act (ARRA) on February 13, 2009. U.S. President Barack Obama signed the bill into law on February 17, 2009. ARRA was passed in response to widespread fears that... more
The United States Congress approved the American Recovery and Reinvestment Act (ARRA) on February 13, 2009. U.S. President Barack Obama signed the bill into law on February 17, 2009. ARRA was passed in response to widespread fears that the United States was in danger of slipping into a 1930s-style economic depression. After ARRA was enacted, related economic debate centered on tax reductions versus direct federal-government spending. Old arguments resurfaced about the effectiveness of the “New Deal” programs instituted by U.S. President Franklin Roosevelt; the 1936-1938 recession; and the theoretical views of both Keynesian and neoclassical economists.Since ARRA was passed, a number of economists have criticized the effectiveness of the stimulus program. Criticisms have ranged from arguments that “the stimulus was too small to be effective” to assertions of ARRA’s failure to address the shortage of qualified workers in the labor force.I briefly review some of these arguments and conduct empirical tests to determine their validity.
Research Interests:
Beginning in 1992, Greece’s economy was at least partially managed consistent with European Union (EU) membership. Greece joined the EU on January 1, 2001, adopting the Euro at a conversion rate of 340.75 Drachmas per Euro.From 1995-2000,... more
Beginning in 1992, Greece’s economy was at least partially managed consistent with European Union (EU) membership. Greece joined the EU on January 1, 2001, adopting the Euro at a conversion rate of 340.75 Drachmas per Euro.From 1995-2000, Greece had 3.2% average GDP growth, 5.5% consumer inflation, a 10.5% unemployment rate, and a government deficit of 4.5% of GDP. After 11 years of EU membership, Greece’s 2012 GDP growth rate is minus 6.4%, its consumer inflation rate is 1.0%, its unemployment rate is 25.4%, and its government deficit is 7.6% of GDP. Some economists suggest that Greece, as did Argentina, should default on its debt.This paper reviews two competing theories for Greece’s economic decline: (1) Greece was disadvantaged by EU membership, by switching to the Euro, and by subsequent austerity measures; or (2) Greece accumulated excessive debt, creating an economic bubble.I examine these theories by defining the conditional exchange rate for the Drachma as the rate that would have prevailed if Greece had not adopted the Euro. Under a Drachma regime, I assume that Greek policymakers would have attempted to keep an investment-grade credit rating. I account for economic adjustment, and calculate values of the following Greek economic variables for 1990-2012: the conditional exchange rate of the Drachma, the debt-to-GDP ratio, the growth rate of real GDP, prevailing interest rates, and other relevant macroeconomic variables.
Research Interests:
The paper defines “international sanctions” as politically and economically coercive decisions imposed by two or more countries upon another country to further their own perceived strategic interests. International sanctions can include... more
The paper defines “international sanctions” as politically and economically coercive decisions imposed by two or more countries upon another country to further their own perceived strategic interests. International sanctions can include economic manipulation; coercive diplomatic efforts; or preliminaries to war.<br><br>Sanctions are controversial. Scholars question sanctions’ effects on innocent citizens; the level of ethnocentrism involved in designing and implementing sanctions; and the possibility that sanctions may be ineffective. Ang and Peksen 2007 found that sanctions achieve their goals only 33% of the time.<br><br>Supporters of sanctions argue that regardless of sanctions’ negative effects on innocent people, those citizens were already being oppressed by their government. Supporters also argue that sanctions are the best international alternative to inaction; and that in the absence of sanctions, oppressive regimes have no incentive to reform.<br> <br>Opponents of sanctions argue that sanctions promote western values while diminishing the culture of the targeted state. Conversely, supporters argue that something must be done, and cite democratic peace theory as a justification for cultural insensitivity.<br><br>There have been several international sanctions against Russia by the U.S. and its allies, beginning in 1979 when the U.S. stopped wheat exports to the Soviet Union. The most recent major sanction was imposed in 2014 on the Russian Federation following its annexation of Crimea.<br>The paper examines economic and political sanctions against Russia and attempts to determine their effect on political and macroeconomic variables such as election results, exchange rates, trade, unemployment rates, and economic growth; and whether sanctions have been effective in meeting their goals.
Research Interests:
The Value Added Tax (VAT) is widely used throughout Europe and is analogous to state and local sales taxes in the United States of America (U.S.) in that both are taxes on consumption. However, Europe's VAT rates are much higher than... more
The Value Added Tax (VAT) is widely used throughout Europe and is analogous to state and local sales taxes in the United States of America (U.S.) in that both are taxes on consumption. However, Europe's VAT rates are much higher than U.S. sales tax rates. The standard VAT rate ranges from 20% in Austria to 27% in Hungary. In contrast, U.S. state and local sales tax rates range from 0% in three states to 9.45% in Tennessee. Additionally, U.S. taxpayers can take a federal income tax deduction for sales taxes paid; thereby reducing their overall federal income tax bills. In part, the relatively low U.S. sales tax contributes to the difference in recent economic performance between the U.S. and Europe. Over the last year, Real Gross Domestic Product (RGDP) has increased by 2.4% in the United States compared with 1.4% in the Euro Area. The U.S. civilian unemployment rate is 5.0% compared with 10.2% in the Euro area.This paper examines whether European countries have been harmed by their high VAT rates. I collect revenue and expenditure data for 19 European countries, 17 of which are members of the European Union. For each country, I determine the effect of the VAT on GDP, on the unemployment rate, and on social welfare.The paper refers to the optimal tax theory, which defines an optimal tax regime as one in which social welfare is maximized. I introduce two additional criteria: GDP maximization and unemployment rate minimization. I compare the existing European tax regime to the current U.S. tax regime, and estimate the optimal VAT tax rate for 19 European countries.
Research Interests:
Research Interests:
Research Interests:
The American Recovery and Reinvestment Act (ARRA) was passed in response to widespread fears that that United States was in danger of slipping into a 1930s-style economic depression. Once the ARRA was introduced, the economic debate... more
The American Recovery and Reinvestment Act (ARRA) was passed in response to widespread fears that that United States was in danger of slipping into a 1930s-style economic depression. Once the ARRA was introduced, the economic debate centered on tax reductions versus direct government spending. Old arguments resurfaced about the effectiveness of the Roosevelt New Deal, the 1936-1938 recession, and the theoretical views of both Keynesian and neoclassical economists. I briefly review the economic literature and discuss the economic arguments of both sides.My research accounts for economic adjustment, and seeks to calculate the optimal mix of tax reductions and direct government spending using three different standards: effect on Real Gross Domestic Product, effect on the stock market , and effect on the U.S. civilian unemployment rate.I found that ARRA did not fund an optimal mix of tax reductions and direct government spending because ARRA included subsidies to individual states, loan guarantees, and other subsidies.
Research Interests:
My paper provides interim results of my PhD dissertation. I hypothesize that &quot;Firms increase and decrease employment in response to changes in expected demand.&quot; The paper seeks to answer the question &quot;What are... more
My paper provides interim results of my PhD dissertation. I hypothesize that &quot;Firms increase and decrease employment in response to changes in expected demand.&quot; The paper seeks to answer the question &quot;What are the determinants of changes in aggregate employment in the United States of America [U.S.]?&quot; This is an important research topic because significant increases in unemployment can have a profound effect on an entire society, not just on its unemployed workers. When employment declines, public health declines, crime increases, suicides increase, and public revenues decrease. Government is then placed in the unenviable position of facing increased demand for services at the very time that revenue is declining. The paper uses quarterly data from 1948-2021 to estimate the effect of important macroeconomic variables on aggregate employment. The macroeconomic variables include personal consumption expenditures, U.S. federal government expenditures, nominal GNP, international trade (imports plus exports), M3 money stock, the minimum wage level, non-residential fixed investment, non-manufacturing employment, and U.S. federal tax receipts.
Research Interests:
Research Interests:
My paper provides interim results of my PhD dissertation. I hypothesize that &quot;Firms increase and decrease employment in response to changes in expected demand.&quot; The paper seeks to answer the question &quot;What are... more
My paper provides interim results of my PhD dissertation. I hypothesize that &quot;Firms increase and decrease employment in response to changes in expected demand.&quot; The paper seeks to answer the question &quot;What are the determinants of changes in aggregate employment in the United States of America [U.S.]?&quot; This is an important research topic because significant increases in unemployment can have a profound effect on an entire society, not just on its unemployed workers. When employment declines, public health declines, crime increases, suicides increase, and public revenues decrease. Government is then placed in the unenviable position of facing increased demand for services at the very time that revenue is declining. The paper uses quarterly data from 1948-2021 to estimate the effect of important macroeconomic variables on aggregate employment. The macroeconomic variables include personal consumption expenditures, U.S. federal government expenditures, nominal GNP, international trade (imports plus exports), M3 money stock, the minimum wage level, non-residential fixed investment, non-manufacturing employment, and U.S. federal tax receipts.
Research Interests:
The paper provides interim results of my PhD dissertation. The research hypothesis is "Firms increase and decrease employment in response to changes in expected demand." The paper seeks to answer the question "What are the determinants of... more
The paper provides interim results of my PhD dissertation. The research hypothesis is "Firms increase and decrease employment in response to changes in expected demand." The paper seeks to answer the question "What are the determinants of changes in aggregate employment in the United States of America (U.S.)?" This is an important research topic because significant increases in unemployment can have a profound effect on an entire society, not just on its unemployed workers. When employment declines, public health declines, crime increases, suicides increase, and public revenues decrease. The paper uses quarterly data from 1948-2021 to estimate the effect of important macroeconomic variables on aggregate employment. The macroeconomic variables include personal consumption expenditures, U.S. federal government expenditures, nominal GNP, international trade (imports plus exports), M3 money stock, the minimum wage level, non-residential fixed investment, nonmanufacturing employment, and U.S. federal tax receipts.
Research Interests:
My paper provides interim results of my PhD dissertation. I hypothesize that "Firms increase and decrease employment in response to changes in expected demand." The paper seeks to answer the question "What are the determinants of changes... more
My paper provides interim results of my PhD dissertation. I hypothesize that "Firms increase and decrease employment in response to changes in expected demand." The paper seeks to answer the question "What are the determinants of changes in aggregate employment in the United States of America [U.S.]?" This is an important research topic because significant increases in unemployment can have a profound effect on an entire society, not just on its unemployed workers. When employment declines, public health declines, crime increases, suicides increase, and public revenues decrease. Government is then placed in the unenviable position of facing increased demand for services at the very time that revenue is declining.
The paper uses quarterly data from 1948-2021 to estimate the effect of important macroeconomic variables on aggregate employment. The macroeconomic variables include personal consumption expenditures, U.S. federal government expenditures, nominal GNP, international trade (imports plus exports), M3 money stock, the minimum wage level, non-residential fixed investment, non-manufacturing employment, and U.S. federal tax receipts.
The paper uses quarterly data from 1948-2021 to estimate the effect of important macroeconomic variables on aggregate employment. The macroeconomic variables include personal consumption expenditures, U.S. federal government expenditures, nominal GNP, international trade (imports plus exports), M3 money stock, the minimum wage level, non-residential fixed investment, non-manufacturing employment, and U.S. federal tax receipts.
COVID-19 is an ongoing global outbreak of coronavirus disease 2019, an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The World Health Organization (WHO) declared the outbreak a Public Health... more
COVID-19 is an ongoing global outbreak of coronavirus disease 2019, an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The World Health Organization (WHO) declared the outbreak a Public Health Emergency of International Concern on January 30, 2020; and a pandemic on March 11, 2020.<br><br>Several mitigation measures have been used in attempts to limit the spread of the virus, including mandatory wearing of masks in public; bans on unnecessary travel; and the closure of non-essential businesses. This paper defines a lockdown as the closure of non-essential businesses combined with requirements that all citizens stay at home except for grocery shopping, trips to a pharmacy, and medical appointments.<br><br>The effectiveness of lockdowns is controversial. Proponents tend to argue that lockdowns would have been more effective if enforcement had been increased and if lockdowns had been extended for a longer period of time. Opponents have argued that lockdowns hurt the economy, hurt children, and have had little positive effect on public health.<br><br>The paper addresses the economic effect of COVID-19 lockdowns in the United States using a Benefit/Cost Analysis (BCA) framework. Two separate analyses are provided: a traditional BCA analysis, which assumes that the value of life is constant regardless of age; and a Preferred Analysis, which adjusts the number of deaths, and values the economic cost of the deaths based on the age of the deceased.<br>
Research Interests:
Research Interests:
The Discounted Cash Flow Model (DCF) and the Capital Asset Pricing Model (CAPM) are often used to determine an appropriate return on equity for regulated utilities. However, both the CAPM and the DCF will sometimes produce unrealistically... more
The Discounted Cash Flow Model (DCF) and the Capital Asset Pricing Model (CAPM) are often used to determine an appropriate return on equity for regulated utilities. However, both the CAPM and the DCF will sometimes produce unrealistically high or low results during times of excess market volatility.In the 40 years since the initial publication of the CAPM, there have been numerous criticisms of the model in the financial literature. Studies have suggested that future returns on stocks with a high earnings/price ratio are higher than predicted by the CAPM (Basu, 1977); that average returns on stocks with a low market capitalization are higher than predicted by the CAPM (Banz, 1981); that high debt-equity ratios are associated with returns higher than their market betas (Bhandari, 1988); that stocks with high book-to-market equity ratios have high average returns which are not captured by their betas (Statman, 1980 and Rosenberg, Reid, and Lanstein, 1985); that non-systematic risk has a significant effect on excess returns (Lintner, 1965b); and that the expected return-beta relationship is not fully consistent with empirical observations (Fama and MacBeth, 1973).We review the literature concerning the CAPM and DCF models and briefly discuss the arguments of the proponents of each model.We use data from 70 electric, natural gas, and water utility stocks and separately estimate a one-year forward market price for the years 2001-2011. We estimate the expected return for each stock using the following models: the CAPM; two single-stage DCF models (one based on dividend growth estimates and one based on earnings growth estimates); two three-stage DCF models (one based on dividend growth estimates and one based on earnings growth estimates); and the Capital Appreciation plus Income (CA I) (stock price change plus dividends) model.We then evaluate the CAPM, DCF, and CA I models using a sum of the squared differences method.
Research Interests:
Beginning in 1992, Greece’s economy was at least partially managed consistent with European Union (EU) membership. Greece joined the EU on January 1, 2001, adopting the Euro at a conversion rate of 340.75 Drachmas per Euro.From 1995-2000,... more
Beginning in 1992, Greece’s economy was at least partially managed consistent with European Union (EU) membership. Greece joined the EU on January 1, 2001, adopting the Euro at a conversion rate of 340.75 Drachmas per Euro.From 1995-2000, Greece had 3.2% average GDP growth, 5.5% consumer inflation, a 10.5% unemployment rate, and a government deficit of 4.5% of GDP. After 11 years of EU membership, Greece’s 2012 GDP growth rate is minus 6.4%, its consumer inflation rate is 1.0%, its unemployment rate is 25.4%, and its government deficit is 7.6% of GDP. Some economists suggest that Greece, as did Argentina, should default on its debt.This paper reviews two competing theories for Greece’s economic decline: (1) Greece was disadvantaged by EU membership, by switching to the Euro, and by subsequent austerity measures; or (2) Greece accumulated excessive debt, creating an economic bubble.I examine these theories by defining the conditional exchange rate for the Drachma as the rate that would have prevailed if Greece had not adopted the Euro. Under a Drachma regime, I assume that Greek policymakers would have attempted to keep an investment-grade credit rating. I account for economic adjustment, and calculate values of the following Greek economic variables for 1990-2012: the conditional exchange rate of the Drachma, the debt-to-GDP ratio, the growth rate of real GDP, prevailing interest rates, and other relevant macroeconomic variables.
Research Interests:
The American Recovery and Reinvestment Act (ARRA) was passed in response to widespread fears that that United States was in danger of slipping into a 1930s-style economic depression. Once the ARRA was introduced, the economic debate... more
The American Recovery and Reinvestment Act (ARRA) was passed in response to widespread fears that that United States was in danger of slipping into a 1930s-style economic depression. Once the ARRA was introduced, the economic debate centered on tax reductions versus direct government spending. Old arguments resurfaced about the effectiveness of the Roosevelt New Deal, the 1936-1938 recession, and the theoretical views of both Keynesian and neoclassical economists. I briefly review the economic literature and discuss the economic arguments of both sides.My research accounts for economic adjustment, and seeks to calculate the optimal mix of tax reductions and direct government spending using three different standards: effect on Real Gross Domestic Product, effect on the stock market , and effect on the U.S. civilian unemployment rate.I found that ARRA did not fund an optimal mix of tax reductions and direct government spending because ARRA included subsidies to individual states, loan guarantees, and other subsidies.
Research Interests:
The United States Congress approved the American Recovery and Reinvestment Act (ARRA) on February 13, 2009. U.S. President Barack Obama signed the bill into law on February 17, 2009. ARRA was passed in response to widespread fears that... more
The United States Congress approved the American Recovery and Reinvestment Act (ARRA) on February 13, 2009. U.S. President Barack Obama signed the bill into law on February 17, 2009. ARRA was passed in response to widespread fears that the United States was in danger of slipping into a 1930s-style economic depression. After ARRA was enacted, related economic debate centered on tax reductions versus direct federal-government spending. Old arguments resurfaced about the effectiveness of the “New Deal” programs instituted by U.S. President Franklin Roosevelt; the 1936-1938 recession; and the theoretical views of both Keynesian and neoclassical economists.Since ARRA was passed, a number of economists have criticized the effectiveness of the stimulus program. Criticisms have ranged from arguments that “the stimulus was too small to be effective” to assertions of ARRA’s failure to address the shortage of qualified workers in the labor force.I briefly review some of these arguments and conduct empirical tests to determine their validity.
Research Interests:
Research Interests:
The paper defines “international sanctions” as politically and economically coercive decisions imposed by two or more countries upon another country to further their own perceived strategic interests. International sanctions can include... more
The paper defines “international sanctions” as politically and economically coercive decisions imposed by two or more countries upon another country to further their own perceived strategic interests. International sanctions can include economic manipulation; coercive diplomatic efforts; or preliminaries to war.<br><br>Sanctions are controversial. Scholars question sanctions’ effects on innocent citizens; the level of ethnocentrism involved in designing and implementing sanctions; and the possibility that sanctions may be ineffective. Ang and Peksen 2007 found that sanctions achieve their goals only 33% of the time.<br><br>Supporters of sanctions argue that regardless of sanctions’ negative effects on innocent people, those citizens were already being oppressed by their government. Supporters also argue that sanctions are the best international alternative to inaction; and that in the absence of sanctions, oppressive regimes have no incentive to reform.<br> <br>Opponents of sanctions argue that sanctions promote western values while diminishing the culture of the targeted state. Conversely, supporters argue that something must be done, and cite democratic peace theory as a justification for cultural insensitivity.<br><br>There have been several international sanctions against Russia by the U.S. and its allies, beginning in 1979 when the U.S. stopped wheat exports to the Soviet Union. The most recent major sanction was imposed in 2014 on the Russian Federation following its annexation of Crimea.<br>The paper examines economic and political sanctions against Russia and attempts to determine their effect on political and macroeconomic variables such as election results, exchange rates, trade, unemployment rates, and economic growth; and whether sanctions have been effective in meeting their goals.
Research Interests:
The Capital Asset Pricing Model (CAPM) is often used to determine an appropriate return on equity for regulated utilities. However, the CAPM will sometimes produce unrealistically high or low results during times of excess market... more
The Capital Asset Pricing Model (CAPM) is often used to determine an appropriate return on equity for regulated utilities. However, the CAPM will sometimes produce unrealistically high or low results during times of excess market volatility. I hypothesize that these results do not indicate a failure in the model itself. Instead, they are caused by the traditional implementation of the CAPM and the underlying definition of risk used by many financial theorists.My paper uses 1997-2001 data to provide an empirical comparison of betas generated in a manner consistent with the capital asset pricing model (CAPM betas) to betas generated using a method based on market losses (“Alternative Betas”). I use psychological literature and a mathematical example to suggest that when a loss-based notion of risk is used, only those observations in which the market declines constitute market risk; and that the CAPM is a systematically biased estimator of market risk because the variability of gains receive the same weight as the variability of losses.In the CAPM world, there are only two types of risk: market risk (measured by beta), and firm-specific risk; with the assumption that only market risk will be rewarded since firm specific risk can be diversified away. The CAPM assumes that the market is mean-variance efficient; predicts that the constant term will be 0; and predicts that a security's risk premium is proportional to both beta and the risk premium of the market portfolio (Bodie, 1996). Mathematically, the risk premium is equal to β[E(rM) − rf], where rM is the market return and rf is the risk-free rate.In the 30 years since the initial publication of the CAPM, there have been numerous criticisms of the model in the financial literature. Studies have suggested that the CAPM is not testable because the composition of the true market portfolio is unknown (Roll, 1977); the constant term is positive and significant (Miller and Scholes, 1972); the estimated risk premium is significantly lower than the actual risk premium (Black, Jensen, and Scholes, 1972); non-systematic risk has a significant effect on excess returns (Lintner, 1965b); and the expected return-beta relationship is not fully consistent with empirical observations (Fama and MacBeth, 1973).
Research Interests:
The Value Added Tax (VAT) is widely used throughout Europe and is analogous to state and local sales taxes in the United States of America (U.S.) in that both are taxes on consumption. However, Europe's VAT rates are much higher than... more
The Value Added Tax (VAT) is widely used throughout Europe and is analogous to state and local sales taxes in the United States of America (U.S.) in that both are taxes on consumption. However, Europe's VAT rates are much higher than U.S. sales tax rates. The standard VAT rate ranges from 20% in Austria to 27% in Hungary. In contrast, U.S. state and local sales tax rates range from 0% in three states to 9.45% in Tennessee. Additionally, U.S. taxpayers can take a federal income tax deduction for sales taxes paid; thereby reducing their overall federal income tax bills. In part, the relatively low U.S. sales tax contributes to the difference in recent economic performance between the U.S. and Europe. Over the last year, Real Gross Domestic Product (RGDP) has increased by 2.4% in the United States compared with 1.4% in the Euro Area. The U.S. civilian unemployment rate is 5.0% compared with 10.2% in the Euro area.This paper examines whether European countries have been harmed by their high VAT rates. I collect revenue and expenditure data for 19 European countries, 17 of which are members of the European Union. For each country, I determine the effect of the VAT on GDP, on the unemployment rate, and on social welfare.The paper refers to the optimal tax theory, which defines an optimal tax regime as one in which social welfare is maximized. I introduce two additional criteria: GDP maximization and unemployment rate minimization. I compare the existing European tax regime to the current U.S. tax regime, and estimate the optimal VAT tax rate for 19 European countries.
Research Interests:
Traditionally, evidentiary hearings were held during almost all of the energy ratemaking proceedings of the California Public Utilities Commission (CPUC). This is often referred to as the “litigation model” of regulation. In recent years,... more
Traditionally, evidentiary hearings were held during almost all of the energy ratemaking proceedings of the California Public Utilities Commission (CPUC). This is often referred to as the “litigation model” of regulation. In recent years, the CPUC has often used a “collaborative model” of regulation, in which proceedings are dominated by workshops and by several rounds of comments from practitioners (representatives of parties). My research reviews a number of CPUC energy regulatory proceedings, and compares the results of litigation proceedings with collaborative proceedings.I review the literature concerning both the collaborative and the litigation models of regulation, and interview CPUC practitioners (attorneys and advocates) to determine their views on regulatory processes. I briefly discuss the arguments of the proponents of the collaborative and the litigation models.
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Research Interests:
On June 23, 2016, United Kingdom (UK) voters decided to leave the Euro-pean Union (EU), thereby starting a process commonly known as Brexit. British Prime Minister Theresa May invoked EU Article 50 on March 29, 2017. The invocation of EU... more
On June 23, 2016, United Kingdom (UK) voters decided to leave the Euro-pean Union (EU), thereby starting a process commonly known as Brexit. British Prime Minister Theresa May invoked EU Article 50 on March 29, 2017. The invocation of EU Article 50 puts the UK on a course to leave the EU by the end of March 2019. Meanwhile, the UK remains a full member of the European Union. Since the Brexit vote, there have been several extremely pessimistic predictions of the economic and political effects of the UK's exit from the EU. For example, the London School of Economics' Center for Economic Performance forecast a loss in UK Gross Domestic Product (GDP) of from 2.3%-9.5% and a decrease in UK trade. The major economic impact of Brexit to date is the decline in the value of the British Pound (GBP), which has fallen from USD $1.467 on June 20, 2016 to $1.204 on January 16, 2017. A decline in the value of a country's currency means that its products will be less expensive on the wo...
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CoVid-19 is an ongoing global outbreak of coronavirus disease 2019, an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The World Health Organization (WHO) declared the outbreak a Public Health... more
CoVid-19 is an ongoing global outbreak of coronavirus disease 2019, an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The World Health Organization (WHO) declared the outbreak a Public Health Emergency of International Concern on January 30, 2020; and a pandemic on March 11, 2020.
Several mitigation measures have been used in attempts to limit the spread of the virus, including mandatory wearing of masks in public; bans on unnecessary travel; and the closure of non-essential businesses. This paper defines a lockdown as the closure of non-essential businesses combined with requirements that all citizens stay at home except for grocery shopping, trips to a pharmacy, and medical appointments.
The effectiveness of lockdowns is controversial. Proponents tend to argue that lockdowns would have been more effective if enforcement had been increased and if lockdowns had been extended for a longer period of time. Opponents have argued that lockdowns hurt the economy, hurt children, and have had little positive effect on public health.
The paper addresses the economic effect of CoVid-19 lockdowns in the United States using a Benefit/Cost Analysis (BCA) framework. Two separate analyses are provided: a traditional BCA analysis, which assumes that the value of life is constant regardless of age; and a Preferred Analysis, which adjusts the number of deaths, and values the economic cost of the deaths based on the age of the deceased.
Several mitigation measures have been used in attempts to limit the spread of the virus, including mandatory wearing of masks in public; bans on unnecessary travel; and the closure of non-essential businesses. This paper defines a lockdown as the closure of non-essential businesses combined with requirements that all citizens stay at home except for grocery shopping, trips to a pharmacy, and medical appointments.
The effectiveness of lockdowns is controversial. Proponents tend to argue that lockdowns would have been more effective if enforcement had been increased and if lockdowns had been extended for a longer period of time. Opponents have argued that lockdowns hurt the economy, hurt children, and have had little positive effect on public health.
The paper addresses the economic effect of CoVid-19 lockdowns in the United States using a Benefit/Cost Analysis (BCA) framework. Two separate analyses are provided: a traditional BCA analysis, which assumes that the value of life is constant regardless of age; and a Preferred Analysis, which adjusts the number of deaths, and values the economic cost of the deaths based on the age of the deceased.
Research Interests:
The objective of this dissertation is to determine the effect of expected demand on aggregate employment in the United States (U.S.) for the period 1948 Q1 to 2023 Q3. The relationship is studied using both qualitative and quantitative... more
The objective of this dissertation is to determine the effect of expected demand on aggregate employment in the United States (U.S.) for the period 1948 Q1 to 2023 Q3. The relationship is studied using both qualitative and quantitative analysis. My work is primarily based on expectations theory and on Keynesian economic theory, carefully considering the work of Lucas, Muth, and Sargent on expectations theory; and the work of Keynes on unemployment and effective demand. My model results indicate that economic expectations have a significant effect on aggregate employment. The Research Problem is "What are the determinants of changes in aggregate employment in the United States of America (U.S.)?" This is an important research topic because significant increases in unemployment can have profound effects on an entire society, not just on its unemployed workers. When unemployment increases significantly, public health declines, crime increases, suicides increase, and public revenues decrease. Government is then placed in the unenviable position of facing increased demand for public services at the very time that public revenue is declining.